Time Card Preparation Policy

Aetos Systems, Inc. Timekeeping Policy

I. PURPOSE

The purpose of this policy is to provide employees with the correct procedure for recording time worked as well as paid absences, instructions for correcting errors on timesheets, and guidance in submission and final review of the timesheets. Timesheets are used to enter labor charges into accounting documents that support Aetos Systems, Inc. billings to customers.

II. POLICY

It is the policy of Aetos Systems, Inc. that each employee shall be responsible for accurately reporting his or her time worked on Company business in accordance with established timekeeping and recording procedures.

III. SCOPE

This policy applies to all Aetos Systems, Inc. employees.

IV. DEFINITIONS

Project Number (“charge number”) - A number used to identify a specific contract and task assignment, or indirect (Overhead, General and Administrative, or Proposal) work.

Floor Check - The Defense Contract Audit Agency (DCAA) and other Government agencies conduct random labor audits (floor checks) during which the Government representatives will interview Aetos Systems, Inc. employees to determine whether acceptable procedures are being used to record labor charges.

Work Order Authorization (WOA) – Official documentation of an employee’s authorization to charge work time to a specific task for a given period of time.

Exempt Employee - An exempt employee is a full-time salaried employee who may be exempt from overtime pay under the guidelines provided in the Fair Labor Standards Act as amended.

Non-Exempt Employee - A non-exempt employee is an hourly (non-salaried) employee that is covered by the Fair Labor Standards Act as amended.

Timesheet Correction - A timesheet correction is a correction that is required after the timesheet has been approved and entered into the accounting system.

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V. PROCEDURES:

1. General

 Company management is responsible for ensuring that all employees are fully aware of proper timekeeping policies and procedures. Company Management is specifically responsible for ensuring that all new employees are properly educated as to these procedures upon being hired.

 The nature of work shall determine the proper distribution of time, not availability of funding, type of contract, or other factors.

 Work Order Authorizations (WOA) with appropriate project or numbers will be made available to the supervisors and managers in a timely manner so that the employee knows the correct project number or charge code prior to beginning his or her task. WOAs will be given to each employee each time new funding is received for their technical direction orders or an employee is approved to work on other projects or tasks.

 Each supervisor verifies and approves the timesheets for employees under their supervision.

 All types of labor are identified by a project number/charge description. Types of labor may include direct project, indirect and paid absences.

 Employees are not permitted to complete timesheets in advance of work, except for administrative leave, PTO and holidays.

 Hours should be recorded to the nearest fourth-hour (15 minute) increment, with an exception for programs which require more stringent recording practices (e.g. 6 minutes).

2. Preparation and Review of Timesheets

 Timesheets are required to be completed daily as work is finished. If circumstances make end of day (EOD) time accounting unfeasible, then entry is required by 10:00 a.m. the following day. Timesheets are to be completed and signed by 10:00 a.m. on the day after the pay period ending date. Timesheets are to be approved by 12:00 a.m. on that same day.

 Each employee is responsible for accurately reporting the actual time worked on Company business. This responsibility includes correct coding and distribution of time by project numbers, contract number or name, or other identifiers for a particular activity/assignment. Some employees may charge to multiple projects and it is imperative that every effort is taken to ensure correct coding is made.

 All time worked, productive or nonproductive will be accurately recorded on the employee’s timesheet in Deltek Time and Expense. Both compensated and uncompensated time worked will be reflected on each employee’s timesheet.

 Employees are not authorized to prepare another employee’s timesheet. Employees who are absent and do not have internet access to the electronic timesheet may have their supervisor input their time in their absence. The supervisor shall provide an explanation to show the reason the timesheet cannot be completed by the employee (e.g., travel, vacation, sick).

 If an employee works on multiple project numbers, a temporary log may be used throughout the day to account for time spent while moving back and forth between projects. However, at the end of day, the time must be recorded on the timesheet.

 No Aetos Systems, Inc. supervisor will attempt to influence an employee to report incorrect or improper labor charges. Employees will not report incorrect or improper labor charges due to pressure from management, customers, known budget problems, funding concerns, or for any other reason.

 Aetos Systems, Inc. will grant paid holiday time off to all regular full-time employees immediately.

3. Timesheet Preparation for Exempt (salaried) Employees

 Hours worked shall include all hours spent on Company business, whether in the office, field, or home. Company business is defined by the employee’s Manager/Supervisor.

 Exempt employees are required to record all hours worked, whether or not they are paid, as labor costs and associated overheads are affected by total hours worked.

 Exempt employees shall not record time to overtime pay types unless it is authorized by management and approved before hours are worked.

 Salaried Full Time (exempt) employees must completely account for and record 80 hours in a pay period through any combination of direct, indirect, PTO, or leave without pay (LWOP). All hours worked over the 80 hours must still be recorded but will be uncompensated, unless compensated overtime has been approved.

 Salaried Full Time (exempt) employees who have exhausted their accrued PTO can “borrow” up to 40 hours of PTO, with management approval. Approval must be provided prior to the employee charging the PTO. Employees who have exhausted their PTO and have borrowed the maximum allowable, must charge leave without pay (LWOP) to ensure hours worked equals 80 in a pay period.

 LWOP must be taken in full day (8 hour) increments.

 Exempt employees can “flex time” their worktime within a pay period. For example, an exempt employee works 12 hours one day. The extra four hours worked are “flex time” hours that may be used, with Supervisor approval, on another day in the same pay period 3 March 6, 2017 Aetos Systems, Inc. Timekeeping Policy

when the employee only works 4 hours. The employee would record 12 hours on one day and 4 hours on the other day. The total hours recorded in the pay period must still meet or exceed the 80 hours for that pay period.

 If at the end of a given pay period, during which PTO has been taken, an exempt employee has hours recorded that exceed 80 hours, then the employee may reduce the number of PTO hours recorded in the pay period to make the total hours equal 80 hours in the pay period. The employee would open the saved timesheet in Deltek Time & Expense, go to the day(s) with PTO and reduce the recorded hours appropriately. The system will require an explanation for the change. After entering the explanation, the employee will re-save and, if necessary, re-sign the timesheet.

Holiday

 For exempt regular full-time employees, holidays are taken and deferred in 8 hour increments. Holiday hours for three-quarter time employees are prorated based on the standard hours worked.

 Holidays are to be taken in 8 hour increments only. If an employee is required to work on a holiday they can “float” the holiday hours to another day in the same calendar year. Holidays can only be deferred if an employee works 8 hours on the holiday. If an employee plans on deferring the holiday the employees will record the direct hours worked to the appropriate direct or indirect charge number. When the employee chooses to take holiday, 8 hours of holiday will be recorded for that day. If the holiday hours are not taken during the calendar year the hours are forfeited.

 If a recognized holiday falls during an eligible employee’s PTO, the employee will be paid holiday pay rather than vacation pay.

 Holiday pay is not provided to part-time employees or employees who are on Short Term Disability, Military Leave or Family Medical Leave Act (FMLA).

Travel

 In limited circumstances, travel time may be considered hours of work. The rules on travel hours of work depend on whether an employee is covered by or exempt from the Fair Labor Standards Act (FLSA). For FLSA-exempt employees, the crediting of travel time as hours of work is as follows:

o Time spent traveling for business can be recorded as hours worked, if the hours charged align the Joint Travel Regulations (JTR) guidelines.

o Arriving at the airport or starting to drive to your business destination will constitute beginning work and arriving at your destination is the end of work. Normal commute time to and from the employee’s primary duty station is not considered travel time and will not be compensated.

o Travel that keeps an employee away from home overnight is travel away from home. Travel away from home is clearly worktime when it cuts across the employee's

workday. The employee is simply substituting travel for other duties. The time is not only hours worked on regular working days during normal working hours but also during the corresponding hours on nonworking days. Thus, if an employee regularly works from 9 a.m. to 5 p.m. from Monday through Friday the travel time during these hours is worktime on Saturday and Sunday as well as on the other days.

o Regular meal period time is not counted as hours worked.

o Time spent in travel away from home outside of regular working hours as a passenger on an airplane, train, boat, bus, or automobile is not considered work time.

4. Timesheet Preparation for Nonexempt (hourly) Employees

 Overtime for nonexempt employees will be paid at time and one-half for hours worked over 40 hours in a workweek, Monday to Sunday. Paid Time Off, Holiday and other paid absences cannot be counted as hours worked for calculating overtime.

 Overtime is recorded on a separate line on the timesheet using an overtime charge code. Prior management approval is required for non-exempt employees to work more than 40 hours in a workweek. An employee’s workweek is a fixed and regularly recurring period of 168 hours - seven consecutive 24-hour periods.

 Employees who have exhausted their accrued PTO can “borrow” up to 40 hours of PTO, with management approval. Approval must be provided prior to the employee charging the PTO.

 Employees who have exhausted their PTO and have borrowed the maximum allowable, must charge leave without pay (LWOP) to ensure hours worked equals 80 in a pay period. LWOP can be taken in 1 hour increments, prior management approval is required.

Travel

 In limited circumstances, travel time may be considered hours of work. For FLSA-covered employees, travel time is credited if it is qualifying hours of work. For FLSA-covered (non-exempt) employees, time spent traveling is hours of work if-

o an employee is required to travel during regular working hours (i.e., during the regularly scheduled administrative workweek); o an employee is required to work during travel o an employee is required to travel as a passenger on a 1-day assignment away from the official duty station; or o an employee is required to travel as a passenger on an overnight assignment away from the official duty station during hours on non-workdays that correspond to the employee's regular working hours. Holiday

 For non-exempt employees, holiday pay will be calculated based on the employee’s straight-time pay rate (as of the date of the holiday) times the number of hours the employee would otherwise have worked on that day.

 If a recognized holiday falls during an eligible employee’s PTO, the employee will be paid holiday pay rather than vacation pay.

 Holiday pay is not provided to part-time employees or employees who are on Short Term Disability, Military Leave or Family Medical Leave Act (FMLA).

5. Accounting Responsibility

 Supervisors will review each timesheet to ensure that each line has been recorded accurately and timesheet has proper signatures. They will be responsible for identifying employees whose timesheets require corrections and notifying the accounting department.

 Upon determining that the timesheets are accurate and in accordance with this policy, Accounting will process payroll for each employee. The timesheet data will also be used to prepare public vouchers for submittal to the U.S. Government, in accordance with the individual contract requirements.

 Accounting will report to the appropriate approving supervisor any employee who continually has errors on his/her timesheet or are indicative of conditions requiring management attention. Accounting will report to the appropriate Executive Manager any approving supervisor who continually approves timesheets with errors or who does not approve his timesheets by the deadline set in this policy.

 Accounting will make audits of timesheets randomly in Deltek Time and Expense, using the Daily Floor Check function. Time must, therefore, be recorded daily and accurately throughout each pay period. Any discrepancies found will be immediately reported to the employee’s approving supervisor.

6. Timesheet Corrections

 If timesheet changes are required after the timesheets are submitted. Such changes would be necessary only if clearly identified errors were present. In this event, the accounting manager, supervisor, or other authorized official will document the reason for the change and notify the appropriate employee to change his timesheet in Deltek Time and Expense. The employee will be required to correct the timecard using the reverse timesheet function and re-sign the timesheet with documentation describing the reason for the change in the recorded labor charge. The supervisor will again approve the timesheet in Deltek Time and Expense after the employee makes the change.

 Except for changes requested by Accounting, all changes should be reported to Accounting immediately to ensure proper payment. Changes are allowed for previous pay periods, but only after notifying both the responsible Manager and Accounting.

7. Employee Timesheet Instruction and Accountability

 All employees will be provided timekeeping preparation instruction annually. The purpose of this training is not only to update the employees as to proper timesheet preparation procedures, but also to remind employees of the ramifications when such procedures are not followed.

 Following the instruction, each employee will be required to sign a statement certifying that they received the training and understand the consequences for failing to comply with company timekeeping instructions.

 Altering, falsifying, or otherwise tampering with time records, or recording times on another employee’s timesheet without consent, may result in disciplinary action, up to and including termination of employment.

 Defense Contract Audit Agency (DCAA) frequently performs unannounced floor checks of the company’s facilities to determine that Aetos employees are consistently following prescribed timekeeping guidelines to ensure accuracy of government contract costs. Not following Aetos timekeeping guidelines and instructions is grounds for disciplinary action.

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